targets $2bn revenue, announces free Chatter

19th Nov 2010 is set to debut a free version of its Chatter collaboration Cloud offering as it looks set to become the first $2 billion a year Cloud Computing firm.

"In my opinion, there has never been a better time to be in the Cloud Computing industry. According IDC the Cloud market is expected to grow by a compound annual growth rate of 25% through 2014 to roughly $40 billion," said CEO Marc Benioff as he revealed preliminary revenue estimates for fiscal year 2012 of $1.97 billion to $2.0 billion.
"The high end of that range would make the first Cloud Computing company ever to achieve $2 billion in annual revenue and puts us in an elite group of our software companies to break through the $2 billion revenue threshold," he said.
For the most recent quarter ended 31st October, earnings more than doubled to $20.6 million from $10.1 million while revenue rose to $330.5 million from $276.5 million a year earlier. The customer base rose 4,700 during the quarter to about 67,900, 31% larger than it was in a year earlier.
Collaboration Cloud
Although it doesn't contribute materially to revenue, the current big success story in Benioff's mind is the so-called Collaboration Cloud offering Chatter which is now being deployed by 60,000 of the firm's 87,000 paying customers. "That means that it is the largest enterprise social network in place today," claimed Benioff. "We've just never seen companies adopt any technology this widely, this fast and we think we're just getting going."
Recent Chatter deployments included, Bausch & Lomb, Bank of America, Deloitte, Harris, Kelly Services, Motorola, Nikon, Siemens and Vodafone while Yahoo – not a customer - bought subscription to use Chatter as a standalone collaboration platform.
Benioff cited Dell – one of the longest standing and largest customers as an example of how Chatter is being adopted. Dell is the largest user of Chatter with over 90,000 employees live on it. "[CEO] Michael Dell really got excited and was using it himself and then said 'let's roll this thing out'," explains Benioff. "Within a couple of weeks, we were able to turn on now almost 100,000 users of Chatter inside Dell. “They've eliminated all the other enterprise social networking products that they were using inside Dell at the same time. They will all be direct now to Chatter."
Out of date
Older social networking offerings are out of date, argued Benioff. "You look at products like Lotus Notes and it's a product that was conceived before Mark Zuckerberg, the founder of Facebook was," he said. "The reality is that it's not a humorous joke. It was a great product at the time, but IBM has done a terrible job in terms of keeping it fresh.
"Customers have been running this technology for two and three decades. They are hiring people out of school and they are coming into these, 'Productivity Applications,' and are saying, 'I don't know how to use this, this is not how I work. Where is my iPad? Where is my iPhone? Where is my BlackBerry? Where is my graphical user interfaces'. [Comanies] are like, 'well, this is graphical user interface' and 'this is Windows'. It's just junk and that's what Lotus Notes is honestly."
Warming to his theme, Benioff criticised the direction of IBM and Microsoft's technology roadmaps. "Just look at the terrible job IBM has done with their software strategy. They've had to move to an acquisition strategy because they left these kinds of core franchises erode. They turned them into cash cows and now they are getting trampled by these next generation products," he added. "I think [Microsoft] SharePoint is very much the same thing. It's kind of the grandmother's attic. These customers throw everything into it and then they can't find it and they don't know what's up there, and they don't know how to get it out."
Viral-based product
The next step for Chatter will be a free version that will be a viral-based product. "We've been testing making Chatter more viral by giving our customers ability to send viral invites," said Benioff. "This will be a new, stripped-down version of Chatter but it will operate within our existing customer network. So if you are a customer, you will be able to email and send viral invites to other customers.
"We will have a free independent service that's kind of a viral service that we'll mostly use as lead-gen and for getting customers to upsell called We plan to launch that in the first quarter. That'll have a lot of the looking flavour that you can see of the traditional enterprise social networking sites."

There will also be a new version of Chatter announced at the Dreamforce conference in San Francisco in early December. "I can tell you that I can't separate myself from it, it's so powerful. I have it on my BlackBerry. I have it on my iPad, my iPhone," said Benioff. "We've released a desktop app for it now that runs on PC and Macintosh built in Adobe Flash and AIR, and we have a native Android product under development.

"It's not just that the feed is full of follow human communication of one person talking to the other which was kind of the first generation like we have in Facebook. If you can get more and more data - and for us, it's all about business transactions and workflow - we can really transform a business and give them more transparency and help CEOs like Michael Dell become more aligned with their organisation."

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